Crypto back rewards are slowly coming back to earth on Visa and Mastercard debit cards, which you can use to spend your cryptocurrency holdings at the checkout and point of sale.
They work broadly like cash back programs, except instead of US dollars, you receive a reward in bitcoin, ether, or a number of other smaller, lesser-known cryptocurrencies.
Also, the rewards you can get are much higher in many cases. Or at least they seem to be.
The Visa debit card, issued by Nasdaq-listed cryptocurrency exchange Coinbase, recently offered 5% on all spend, while the Crypto.com exchange offered its top cardholders 8%, as did world’s largest exchange Binance (which doesn’t working in the US)
The cards definitely have appeal, as Visa said in July that crypto debit card spending surpassed $1 billion in the first half of 2022. So they are popular with crypto owners.
Also Read: Issuers Rush to Meet Consumer Demand for “Cash Back” Crypto Cards Despite Volatility and Risk
Yes but …
However, some powerful big asterisks are beginning to appear.
Coinbase only offered this rate if you accepted your rewards in Stellar Lumens tokens (XLM) instead of Bitcoin, which only offered 1%.
Crypto.com’s 8% rate only went to cardholders in the top five ranks who had deposited approximately $360,000 worth of an exchange-owned CRO token. The exchange’s CEO, Kris Marszalek, announced that they would lower that top rate from 8% to 2% in early May, thereby reducing rewards at the other four levels even more drastically.
Also Read: Crypto.com Discovers Loyalty Programs Are Two-Way Streets
The decision to lower cashback rates and introduce monthly premium caps was “to get closer to the long-term sustainability of our card program,” he said tweeted on the 1st of May.
This decision took about a day, with the top rate rising to 5% and lower tiers rising to 3%, 1.5%, 0.5%, and 0%, with tiers three and four increasing to $50 and $25 Rewards per month were limited.
Binance’s 8% is only available to people with at least 600 of its BNB tokens – currently worth about $312 each – in their accounts. Without a BNB, the cashback rate for spending crypto on the account linked to your debit card is 0.1%, although it goes up to 2% with a BNB.
BlockFi’s Visa debit card recently lowered its flat rate from 2% to 1.5%, though it’s rising again at $30,000 in annual spend.
To be too good to be true
While there were some cards that offered rewards that sounded too good to be true, this is starting to die. Mainly because everything was too good to be true.
Last November, crypto trading and lending platform Voyager Digital announced that its Mastercard debit cards would offer a 9% crypto rewards card — 10.5% if you were enrolled in the trading platform’s loyalty program — on USDC stablecoins, which be kept on your map.
That rate wasn’t funded by the money made from the cards — they’re debit cards, after all, so consumers didn’t pay interest — but by “marketing expenses,” Voyager CEO Steve Ehrlich told PYMNTS Karen Webster.
More info: Mastercard, Voyager team to make USDC stablecoin withdrawable and mainstream
That revenue was funded from its other businesses, Ehrlich said, calling it “fertilizer” to attract new account holders.
Voyager stopped paying out and then went bankrupt. In July it froze the assets of customers it said are likely to be compromised. That sounds anything but worthwhile.
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